WTF – May 8 2008: Sealord, Tax Cuts, Retirement

WTF – May 8 2008: Sealord, Tax Cuts,
Retirement

1.
Sealord, not Law’ed. How ironic that Sealord –
half owned by Maori business interests - was being
denounced on RNZ this morning by foreign human rights
agencies for co-exploiting the fisheries resources of the
indigenous people of Western Sahara. This isn’t the first
time Sealord’s business links have triggered accusations
of dodgy dealings – remember the charges of their indirect links to whaling earlier this
decade, subsequently terminated after a blaze of publicity
?

2. Politicising the tax cuts. Also
interesting to hear the love fest this morning on RNZ
between Pricewaterhouse tax expert John Shewan and Sean
Plunket on what a bad idea it would be to exempt the first
$9,500 of earnings from income tax, to help the needy,
bridge the income gaps and alleviate poverty. On this point,
there was no argument with Finance Minister Michael Cullen’s world view, in
ruling out the measure. Shewan’s main argument ? That
some people would benefit who weren’t needy, since they
could arrange their finances to produce little, or no
taxable income.

Threadbare stuff. Yes, some people not
in genuine need might exploit that advantage. Far more
people in genuine need would benefit from an initial $9, 500
exemption. More to the point, they will do better under such
an exemption than from an across the board cut in tax rates
- a measure that Shewan and his clients would undoubtedly
favour, since the bulk of the money will go off to the
already relatively well off, while giving the poor a
pittance, at best. Most likely, the real reason Finance
Minister Michael Cullen has decided against the $9,500
exemption is that it would give the bulk of the tax cuts to
people who are either Labour voters already – or non
voters – and he has other fish to fry.

Still, it
leaves the field free for Tariana Turia to exploit the point
in the Maori seats, and elsewhere. As she told Scoop a couple of weeks ago :

Turia….How we’re approaching the whole tax cuts
situation is probably different to how we’re being read.
What we have felt is that those who under $25,000 a year are
the ones who should be receiving the tax cut. In fact, we
don’t feel those people should be paying taxes. $25,000 is
the poverty line in this country. If someone is earning $500
a week and their take home pay is $400 a week, and their
rent is $250- 300 a week… its obviously very difficult for
them. Campbell: So you oppose sweeping tax
cuts across the board ?

Turia : Yes, we’re
quite specific about that.

Campbell: And for
anyone living below a $25,000 poverty level, no
tax?

Turia : No tax.

3. Defence, for
retirement spending. Phil Rennie of the Centre for Independent Studies
arguesthat the $2 billion we are spending on retirement
savings is more than the annual spend on our defence forces.
Bad comparison, if it is meant to suggest our armed services
are going without. They certainly did in the 1990s under
National governments, which starved the defence forces of
new equipment.

Yet ironically under a centre left
government, the annual defence spend this decade has been
enough to pay for a major revamp of defence equipment
including over a hundred LAVs for the Army, overseas
deployments in Timor, Afghanistan and the Gulf, a new EEZ
maritime defence fleet AND a brand new Defence HQ building
in Wellington. Given that New Zealand doesn’t face any
discernible security threat, it makes a lot more sense to
prioritise retirement savings, especially when a demographic
time bomb ( ie, an ageing population) is headed our way.

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